Ford Motor Co. vs. Firestone

Commentary: Why can't they get along

AugustCole

CHICAGO (CBS.MW) -- In the second recall of Firestone tires by Ford Motor Co., drivers have been forced to ride in the back seat.

Consumers are confused and investors are bemused amid a 13-million tire recall that pits the world's No. 2 automaker against one of its oldest suppliers, Firestone.

Just how good was that relationship in the first place? Given the sparring we've seen since the news broke last month, it couldn't have been that cozy to start with considering it was the second Firestone recall. As with fighting parents, it's the kids who are neglected even as Ford, in a $3 billion paternal gesture, moves to make things right.

This can't be good business for either party.

For Ford's, it's all the more important because the Explorer has been one of the most important SUVs ever since it brought that vehicle class mainstream.

Is it a reason to avoid Ford stock, even as Firestone says the problem is with the Explorer SUV and Ford says it's the tires? Banc of America Securities analyst Ron Tadross doesn't think so.

He wrote in a research note late last week that his survey of dealers indicates 73 percent still expect higher Explorer sales than last year. Moreover, he said Ford shares are a better choice than General Motors, the world's biggest automaker, on a risk-reward basis.

He also said though that the recall is a sign the industry itself, not just Ford, is not in sync with its suppliers when it comes to these sorts of issues. Ford disagrees.

Chutes and letters

Since Rep. W.J. "Billy" Tauzin, chairman of the House Energy and Commerce Committee, started steering the issue from Washington, it's gotten a lot more difficult for drivers to know just how safe their tires are. His disclosure of what clearly should be already public information about possible tread separation issues with more than just Firestone's Wilderness AT model has only muddied the waters.

So far it looks like drivers get another month until Explorer and other drivers know what's safe while the committee gets more airtime.

Ford, still trying to get ahead of the developments, has acknowledged it's received a letter and information from Tauzin and will test the replacement tires to see if they in fact don't meet their standard.

It really makes you wonder who is in fact watching over consumers and drivers. To the best of its ability, Ford seems intent on handling this recall, twice the magnitude of last summer's Firestone fiasco, in a responsible way. They want to act quickly, and comprehensively.

If they don't, who's going to buy the blue-oval brand? This is about trust.

Firestone too is clearly convinced it's doing the right thing by ending its relations with Ford
F, -0.35%
at home. In light of the gloves-off approach by both companies such a harsh divorce has been really hard on consumers when you consider the coordination needed to make sure this gets done correctly.

With tires from Michelin, Continental and Goodyear already replacing recalled Firestone tires, it's just the beginning. Ford has said it'll take the entire year to replace the expected 13 million tires.

So much confusion in so little time!

Beta case

Ford's tribulations have given drivers a new look at the cars and trucks they drive. Of course, vehicles are complex and as technologically advanced as they've ever been. So it's ironic that a problem with something that's so simple, like tires, could cause such a problem.

In Ford's case, it has about 10,000 suppliers with 80 percent of its buying accounted for by its top 100.

"It's a sign the auto industry doesn't have the greatest relationship with its suppliers," said Tadross.

Ford, however, maintains that's not the case.

"I would disagree with that adamantly," said Mike Vaughan, consumer and recall spokesman at Ford.

"We work closely with suppliers when we find an issue," he said adding that recalls of all types are constantly monitored. It's not a process where you go into action just when something major crops up.

Dealers, which are also key in the tire replacement process, are just one of the ways that an automaker gets info, Vaughan said.

"It's really the integrity and the availability of the data that's the major problem in this industry," Tadross said. Tauzin's brouhaha and the subsequent confusion among automakers and tire firms is testament to this.

Though it's not just tire suppliers that are the issue, the tire recalls have been very important. For Ford, more so since they took a proactive approach to fixing the problem by assuming the cost of the recall. Just as tires could arguably be the most important part of a car, so was the recall.

"Tires were the beta case for the industry and they failed," Tadross added.

Bottom lines

Is any of this a good reason not to buy a Ford or even a new Explorer? Firestone might say so but it's not.

It is a reason to take a step back and acknowledge as a buyer and a driver, you can be assured that the automakers will go to great lengths to protect and preserve their customers when they figure out something's gone wrong.

In doing so, however, you have to ask why there was a problem in the first place.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.